Students putting together their Spring 2017 schedule should consider some of the college’s special topics courses, which provide intensive study of business topics not regularly covered in the course offerings. In this post, we feature Professor Michael Kirschenheiter's Corporate Financial Reporting course.

ACTG 494: Corporate Financial Reporting

Since the 2008 crisis, accounting knowledge has become highly valued by executives at all levels. This means that business students are at a disadvantage on the job market if they can’t read financial statements. These statements are the informational building blocks of our economy, and the ability to understand them is an increasingly important part of managerial performance. Thus the demand for a course that trains all users–not strictly preparers–of these statements. ACTG 494 will train both accountants and non-accountants in the discretion, interpretation, and nuance involved in financial statements.

Nuance in financial statements takes many forms. Consider revenue recognition, for example; a company like Microsoft leaves billions on its books in unearned revenue, deferring recognition until a later date, maybe when the products are serviced, or, as in the case of IBM, after products are in place and running to specification. If you can’t read a financial statement, you'll pass right over that deferred revenue. Or take cash-flow statements, which are often littered with line items that aren’t cash flows. Imagine you’re holding a restaurant menu and reading the descriptions that tell you what goes into each dish. One description lists ‘shovel’, and sure, at some stage, a shovel was involved in the food you’re about to eat. But you’re not eating the shovel. Financial statements make similar moves, and this is one of the many reasons why people find accounting so confusing.

Another key topic in the course will be articulation, or how different financial statements fit together. The cash flow statement comes into play, for example, when assessing an accountant’s claims about the gross value of a company. Accountants estimate the gross value of companies on income statements, but in order to corroborate those estimates, users of these documents must sift through the cash flow statements alongside the income statements. This is just one of the ways different statements are propped against each other.